The following is an analysis of the accounts filed by Steward Health Group at the Malta Registry of Companies:

Corporate Structure

  1. Vitals Global Healthcare was registered on 13 May 2015, with a share capital of 1,200 shares of Euro 1 each, held by Bluestone Investments Ltd, registered on 9 December 2014. The directors were Sri Ram Tumuluri of Canadian Nationality, and Mark Edward Pawley of British Nationality.
  2. The shareholder of Bluestone Investments is Bluestone Special Situation 4 Limited, which is registered in P.O. Box 97, Offshore Incorporations Centre, British Virgin Islands. The company has a share capital of 1,200 shares of Euro 1 each.
  3. On 30 November 2015, Vitals Global Healthcare, together with its subsidiary companies, signed a services concession agreement with the government for the redevelopment, maintenance, management and operation of the sites at St Luke’s Hospital, Karin Grech Rehabilitation Hospital and the Gozo General Hospital. The effective date of the services concession agreement was 1 June 2016.
  4. On 16 February 2018, Bluestone Investments transferred 1,140 shares to Steward Health Care International Ltd, and 60 shares to Ashak Rattchalli of American Nationality. Following the transfer, Sri Ram Tumuluri and Mark Edward Pawley were replaced as directors by Armin Ernst and Michael Callum, both of American Nationality. Armin Ernst was also appointed Company Secretary on the same date.
  5. Steward Health Care International, with a Share Capital of 1,200 shares of Euro 1 each, was set up on 1 November 2017. The sole shareholder is Steward Health Care International Holdings Limited which is registered in the United Kingdom. The sole director is Ms Nathalie Hibble, of American Nationality.
  6. On 18 May 2018, the company changed its name to Steward Malta Ltd.
  7. Vitals Global Healthcare also registered two fully owned subsidiary companies, Vitals Global Healthcare Management Ltd and Vitals Global Healthcare Assets Ltd. These companies were also registered on 13 May 2015 with a share capital of Euro 1,200 each, and on 18 May 2018, changed their names to Steward Malta Management Ltd and Steward Malta Assets Ltd. The directors were the same as for Vitals Global Healthcare and were replaced by Armin Ernst and Michael Callum on 18 May 2018.
  8. Steward Malta Ltd registered another fully owned subsidiary, Steward Malta Personnel Ltd with a Share Capital of 1,200 shares of Euro 1 each. This was registered on 24 July 2017, and Michael Callum and Armin Ernst act as directors, while Armin Ernst also acts as Company Secretary.
  9. The audited financial statements of Steward Malta Ltd, Steward Malta Management Ltd and Steward Malta Assets Ltd, for financial years ended 31 December 2015 and 31 December 2016 (when the company was still called and owned by Vitals), were signed off on 31 May 2018, and filed with the Malta Business Registry on 19 February 2020.
  10. The audited financial statements of Steward Malta Personnel Ltd and Steward Health Care International Ltd, have never been filed.

My comments

  1. On 16 February 2018, Sri Ram Tumuluri, as director, filed a formal notification with the Registry of Companies that the registered office of Vitals Global Healthcare was changed to 171, Old Bakery Street, Valletta.
  2. On 21 February 2018, Ganado Advocates sent a letter to the Registry of Companies, pointing out that the address of 171 Old Bakery Street, Valletta, effectively belongs to the law firm, and that they were never approached to give their consent for the use of its address as a registered office for the Vitals Companies. The Registrar of Companies was asked to upload their letter on the Registry’s online records.
  3. On 21 February 2018, Armin Ernst, as director, filed a notification with the Registry of Companies, that the registered address of Vitals Global Healthcare was changed to 16, Europa Centre, Floriana.
  4. On 10 November 2016, Ram Tumuluri, as Director of Bluestone Investments Malta Ltd, had notified the Registry of Companies, that the company’s registered address had been changed to 42, Ta’ Xbiex Seafront, Ta’ Xbiex.
  5. On 30 November 2018, nine months after the company transferred its shares in Vitals Global Healthcare to the Steward Group, Mamo TCV Advocates wrote to the Registrar of Companies on behalf of Steward Malta Management Ltd, advising them that Bluestone does not possess lawful authorization to use the registered office at Ta’ Xbiex.
  6. It is questionable as to why the financial statements were signed on 31 May 2018 and not filed before 19 February 2020, that is, nearly two years later.

Financials

Bluestone Investments Limited

The audited financial statements of the company for the period from 9 December 2014 to 31 December 2015, were signed on 31 May 2018 by Mark Edward Pawley and Sri Ram Tumuluri, and filed with the Malta Business Registry on 28 October 2019. No other accounts have since been filed with the Registry.

  1. The company, which is a holding company, made a loss of Euro 191,584 representing administrative expenses.
  2. The only fixed asset in the balance sheet, represents Motor Vehicles purchased during the period at a cost of Euro 358,263.
  3. The only other material asset represents related company receivables amounting to Euro 3.45 million. This is made up of Euro 503,375 due to the company from its subsidiary companies and Euro 2.94 million due from Associate companies. The company’s subsidiary companies are Steward Malta Limited and Crossrange Holdings Limited. No details are given on the identity of the Associate companies.
  4. Crossrange Holdings was registered on 12 December 2014, and is 70% owened by Bluestone Investments, and 30% by Pivot Holdings Ltd which was registered on 9 December 2014. These companies have never submitted their audited financial statements to the Malta Business Registry.
  5. The directors of Crossrange are Mark Edward Pawley and Mohammad Shoaib Walajahi, of Pakistani Nationality who lives in Dubai.
  6. The shareholders of Pivot Holdings are Asad Shaukat Ali of Pakistani Nationality who lives in Pakistan, Shaukat Ali Chaudry of Pakistani Nationality who lives in Malta, and Mohammad Shoaib Walajahi who lives in Dubai.
  7. The company’s main liability represents borrowings of Euro 4 million. This is made up of Euro 212,365 due to hire-purchase creditors on the purchase of motor vehicles, Directors’ loans of Euro 484,844, and loans from third parties of Euro 2.93 million.

My comments

  1. It is highly questionable as to how a company incurs Euro 191,584 in administrative expenses, when it is a holding company, and does not carry out operational activities. Also, administrative expenses would mainly consist of salaries, however the company did not have any employees.
  2. It is highly suspicious that the company purchased motor vehicles at an exorbitant cost of Euro 358,263. One has no choice but to question the reason for the company investing in motor vehicles, the number of vehicles purchased, the brand of the vehicles and who the users are. Motor vehicles are a convenient tool for the laundering of money, and this gains more significance when related to the loans from the directors of Euro 484,844, and the loans of Euro 2.93 received from third parties.
  3. While receiving Euro 2.93 million from third parties, the company channelled Euro 3.45 million to its subsidiary and associated companies. These transactions require further investigation to ascertain who the associated companies are, and the reason for the amounts advanced. The amounts received and paid out don’t carry any interest rate and don’t have a fixed date for repayment and are therefore not considered as activities related to an investment holding company.
  4. The FIAU should consider investigating all the transactions carried out by this company. The company’s bankers should also ensure that a due diligence was carried out before the authorisation of the company’s transactions.

Steward Malta Ltd – Consolidated report

The audited consolidated financial statements of the Steward Malta Group of Companies for the financial years ended 31 December 2015 and 31 December 2016, were signed by Armin Ernst and Michael Callum on 31 May 2018 and filed with the Malta Business Registry on 19 February 2020. The financial statements for 2017 and 2018 have not yet been filed.

  1. The Group made a loss of Euro 6 million in 2016 and Euro 2.9 million in 2015, giving an accumulated loss of Euro 8.9 million at 31 December 2016.
  2. The revenue for 2016 amounted to Euro 38.9 million made up of Euro 29.7 million from the Government allocation, Euro 4.3 million from the Government Services Concession agreement, Euro 0.4 million for the Air-ambulance allocation, and Euro 4.4 million from other income which is not detailed. The comparative revenue for 2015 was Euro 0.7 just from the services concession agreement.
  3. The Group expenditure for 2016 was Euro 44.9 million. The main items of expenditure were Salaries and Wages Euro 28.9 million, and Administration expenses Euro 9 million. The comparative figures for 2015 were Salaries and Wages Euro 0.7 million and Administration expenses Euro 2.8 million. No details are available for Administration Expenses, and therefore it is not possible to analyse further, particularly to establish whether there are any unusual expenses and/or unusual amounts. The number of full-time employees was 1,421 in 2016 and 4 in 2015.
  4. Directors’ remuneration for 2016 was Euro 1.03 million and for 2015 Euro 0.62 million. Considering that there were 2 directors, in 2016 they earned Euro 515,000 each, and in 2015 they earned Euro 310,000 each. The directors during 2015 and 2016 were Sri Ram Tumuluri and Mark Edward Pawley.
  5. The statutory auditor of the group, referred to a material uncertainty relating to the Going Concern, as a result that the Group’s total liabilities exceeded its total assets by Euro 8.9 million.
  6. The total assets of the group amount to Euro 8.6 million, of which Euro 5 million represents what is technically termed as a Contract Asset. Other assets include cash and bank balances, normal trade and other receivables and inventories, mainly pharmacy stocks.
  7. The total liabilities of the group amount to Euro 17.5 million. The main items are Trade payables Euro 10.5 million, amounts due to related companies, Euro 2.8 million, Indirect Taxes Euro 1.9 million and accrued expenses Euro 2.3 million.

My comments

At 31 December 2016, one of the company’s (Steward Malta Management Ltd) contractors had a performance guarantee in place on behalf of the company in favour of the government in respect of the services concession agreement amounting to Euro 9 million. This guarantee was never provided and a temporary waiver seems to have been given. The government withdrew the waiver as from 2 March 2020.

  1. One item that has to be highlighted, is that while the average annual salary per employee equates to Euro 19,600, each director earns Euro 515,000 annually.
  2. In view of the fact that the full contract was never published, it is unclear as to whether Vitals Global Healthcare had the right to transfer its shares to another party.